Louis Ong, a bitcoin trader, has been indicted for running an unlicensed money services business and sentenced to 20 days imprisonment.
Ong had been the subject of an HSI investigation and was arrested in 2017 after reneging on an agreement to cease his unlicensed digital currency trading activities.
The HSI is the investigative arm of the Department of Homeland Security (DHS). The unit has in recent years, taken up a keen interest in policing the domestic P2P crypto trading arena in the U.S. leading to the arrests of many bitcoin traders.
Details of the Investigation
The Vancouver resident posted online advertising about his bitcoin exchange service. Some of the buzzwords used by Ong in the advert raised red flags for HSI investigators. These buzzwords included “high dollar amounts,” and “anonymity for cash trades.”
Undercover federal agents contacted Ong and set up a meeting to buy $12,000 worth of bitcoins from him. The meeting took place at a McDonald’s eatery in Tukwila, Washington.
Soon after the first trade, another deal was arranged for $50,000. Ong also had series of meetings with HSI agents (not undercover agents) after the first two deals had been completed.
One of the biggest nails in Ong’s coffin was his admission that he did not want to know where his clients got the money from to buy bitcoin.
According to the details of the investigation released to the media, Ong wanted plausible deniability and as such, urged his clients to refrain from saying more than they needed to.
When one of the undercover agents deliberately let slip that the funds being used to buy bitcoins from him came from the illegal sale of narcotics, Ong replied by saying:
“I don’t know anything about that, so, what you just told me, like, went over my head. I didn’t hear that. So, there is one thing I tell people is I don’t really care what they use bitcoin for. It’s better that I actually don’t know.”
Arrest and Conviction
During his interviews with the HSI, he was instructed to stop participating in unlicensed bitcoin trading. Ong acquiesced but broke the terms of the agreement by continuing to conduct unregistered bitcoin trading.
Ong was arrested on July 21, 2017, and was indicted in August 2017, on five counts of money laundering and one count of participating in an illegal money transmission service business.
The 37-year-old Ong has been sentenced to 20 days imprisonment and asked to forfeit about $1.1 million worth of cash and bitcoin.
Crackdown on Black Market P2P Bitcoin Trading
In 2013, the Treasury Department of the United States issued a decree that made cryptocurrency trading a money services business. As a result, unlicensed trading in digital currency is illegal in the United States. Those looking to participate in the business have to abide by a raft of statutory regulations and account reporting standards or risk being indicted on money laundering charges.
Since 2016, the HSI has increased its oversight surveillance of the domestic P2P crypto trading scene.
Other federal agencies including the FBI regularly police the market in search of defaulters. Earlier in 2018, California-based Morgan Rockoon was arrested on money laundering and unlicensed bitcoin trading.